Meanwhile, Back at the Ranch . . . lobbyists try to bushwhack buyers of faulty homes

Myra Goldstein's house is falling down, falling down, falling down. The windows leak. Electrical outlets don't work. Outside, stucco is cracking. Inside, drywall is flaking. Upstairs, the balcony is rotting and sagging. Downstairs, a crack in the foundation runs the length of the house, moving the house and, among other things, making the cabinets sag. When Goldstein takes a large metal pot out of a kitchen cabinet, the shelf above it gives way, and a pile of Pyrex crashes to the floor.

"I'm telling you, this is the house from hell," she says above the din.
Sounds like a job for This Old House, which is odd, since Goldstein bought the 3,200-square-foot house new, in 1990, for a hefty $240,000. The views from her lot, which is in a subdivision called Vistana, off Pima Road near Dynamite Road in north Scottsdale, are stunning. The home itself is beautiful--high ceilings, fireplace, kitchen island--and tastefully decorated.

But from the day she moved in, there have been problems, Goldstein says. At her insistence, the builder, UDC, has repeatedly tried to fix them. Sort of. UDC patches the cracks and replaces the windows, but the problems never go away.

Drive around Vistana, and you'll quickly notice that other houses are falling apart, too. Huge cracks are patched on the house across the street from Goldstein's. After years of complaining, Goldstein and about 130 of her neighbors finally filed a class-action lawsuit against the homebuilder, demanding real repairs, rather than the slapdash fix-ups they've been getting. UDC has since been purchased by Shea Homes. The lawsuit is in its early stages. No settlement has been reached.

Eric Sachrison, the lawyer for the Vistana residents, says it could cost as much as $300,000 to properly repair each home.

Goldstein doesn't want to move. In any case, she'd have trouble selling a crumbling house.

"It's a shame," she says. "I wake up every morning and say, 'Please, God, nothing should happen today.'"

Unfortunately, Vistana is hardly unique.
Lawyers like Eric Sachrison who sue homebuilders for a living--especially lawyers living in Maricopa County, where scores of new homes are completed every day--will send their kids to tony colleges on the fees they collect. As more homes are built, complaints mount. When the complaints aren't resolved, homeowners sue.

Last year, fed up with the lawsuits, Arizona homebuilders tried to get a law passed that would have granted them broad immunity from prosecution over allegedly shoddy construction.

This bill would have saved the homebuilders many millions of dollars. It would have set a precedent for other states to follow. This was a big, big deal, and the homebuilders treated it as such. The homebuilders have their own lobbying group, the Home Builders Association of Central Arizona, and their own state lobbyist, Spencer Kamps, but this was a job for Bob Fannin.

It was a classic case of the Super Lobbyist at work. The homebuilders drafted their own legislation and convinced three high-powered Republican senators--Marc Spitzer, Tom Patterson and Rusty Bowers--to introduce it; they worked behind the scenes, trying, by one count, six different ways to cram the bill through the system.

They did everything right, but they still lost. And when they did, the homebuilders retaliated against Phoenix Republican Representative Barry Wong, one of the legislators who refused to play along. The homebuilders' political action committee did an anti-Wong mailing to voters in his district a few days before September's primary. Wong won anyway, but the mailing served as a signal to all legislators who consider crossing big business.

The so-called "Home Builders' Immunity Act," Senate Bill 1401, would have limited the warranty on most work to a year from purchase. It would have prevented homeowner associations from suing on behalf of individual homeowners. Under the bill, homeowners wouldn't have been able to collect punitive damages or damages for inconvenience or, possibly, lawyers fees--even in successful cases.

In defending their bill, the homebuilders repeatedly spoke of the situation in California, where a housing boom has spawned thousands of "frivolous" lawsuits against homebuilders. The cost of defending themselves has forced homebuilders to boost home prices, they say.

The homebuilders asked for the moon, when it might have been more prudent to request a few meteors, their opponents say. The bill was so draconian it was easy to get homeowners like Myra Goldstein riled up about it. Most likely, it would have taken away her chance of getting her home fixed correctly.

"It was horrible," recalls Senator Chris Cummiskey, a Phoenix Democrat. "Basically, it took away any recourse that an individual homeowner would have in going after the contractor for faulty craftsmanship on their home."

Accompanying Fannin when the bill was unveiled before the Senate Finance Committee were other lawyer/lobbyists: Jeff Westfall, an attorney for Continental Homes, and Jeff Sandquist, Brad Holm and Kevin O'Malley, who along with Fannin represent Del Webb and the Home Builders Association. O'Malley, an attorney with Gallagher and Kennedy, was identified as the bill's author.

There was no opposition at the hearing. Fannin, et al., had done their job well, keeping the bill so quiet that prospective opponents hadn't heard about it. Amazingly, it sailed through committee, then passed the full Senate, 22-8, before anyone noticed. Then a story popped up in a daily newspaper, and Eric Sachrison called Judith Connell, a veteran lobbyist but not a hired gun of Fannin's caliber. She signed on as a lobbyist for "Homeowners for Quality Housing," and, along with lobbyists for homeowner associations, fought the bill in the House.